Stock Outlook Deteriorating, deGraaf Says
Edited by Thomas Granahan
Of DOW JONES NEWSWIRES
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10:30 (Dow Jones) The momentum deterioration Lehman's Jeff deGraaf has seen
on his S&P model has found its way into Nasdaq. He says there may be a
little more gas left in the tank - particularly in front of FOMC - but the
upside appears limited. "Bottom line, the picture is deteriorating, and
momentum is now beginning to reflect this," he says. (TG)
10:19 (Dow Jones) A majority of chief executive officers responding to the
latest Business Council survey "find credible the forecasts of large U.S.
budget surpluses in future years." (JC)
10:10 (Dow Jones) Stocks solidly higher in the early going - DJIA up 110 at
10976, Nasdaq adds 28 to 2184, and S&P 500 climbs 10 to 1265. Nasdaq 100
improves by 1.7%, as semis, telecoms act well. Positive thoughts from Morgan
Stanley helping, and IBM gets 1% bump on hopes of positive meeting later.
Drop in jobless claims serves to calm some worries about recession, but also
has brought into question what happens with Fed after Tuesday. Still too
early to make that call, though, and half-point will come off Fed funds rate
at 2:15 p.m. ET on Tuesday. (TG)
9:53 (Dow Jones) How about a 50% gain in one year. That's what Merrill Lynch
believes Triad Hospital (TRI) can deliver. The stock, which closed Wednesday
at $24.70, should hit $36 over the next year, says Merrill, which does its
part to promote interest in the stock by upping shares to buy from
accumulate and adding them to the firm's Focus One list of favorite stocks.
(KJT)
9:47 (Dow Jones) The second half of the year is when the economy should
really get cooking again, says Bank One Chief Economist Diane Swonk, who
adds "the Fed has overshot, and the forecast for it to retrace its steps and
raise rates could occur sooner and more aggressively than currently
forecast." (JC)
9:42 (Dow Jones) Saying the "Train Has Left The Station," Morgan Stanley
Dean Witter upgrades slew of semiconductor capital equipment stocks.
Analysts Jay Deahna and Steven Pelayo say the recent sell off in the group
creates a buying opportunity and said the next upswing will kick off in
September or October. The analysts upgrade their investment ratings on
Applied Materials (AMAT), ASM Lithography Holding (ASML), KLA-Tencor (KLAC),
Lam Research (LRCX), Novellus Systems (NVLS) and Teradyne (TER) to strong
buy from outperform. All are higher early in the session. (DLF)
9:38 (Dow Jones) Nymex crude futures are expected to open unchanged to 5
cents a barrel higher, mostly on technicals. But with little incentive to
push prices higher, traders may decide to take profits on Wednesday's sharp
gains. June crude, up 2c at $28.25 in overnight trade, faces resistance at
$28.73; support is seen at $27.75-$27.90. (MXF)
9:31 (Dow Jones) Greenspan at Chicago Fed conference limits prepared remarks
to banking issues. He urges Congress to avoid expanding the safety net that
the government provides to banks through deposit insurance and other
protections, saying an expansion would encourage "speculative and risky
ventures at the expense of sounder ones." Q&A to follow. (FL)
9:29 (Dow Jones) In upgrading Advo (AD), CSFB cites valuation, a greater
degree of confidence in revised estimates, and view that company can hit
10%-15% EPS growth over the next 3-5 years." (TG)
9:22 (Dow Jones) Apparel retailer American Eagle Outfitters (AEOS) started
it late Wednesday, soaring above high-single-digit Street expectations with
a 22.7% April sales gain at stores open at least a year. This morning the
likes of Abercrombie & Fitch (ANF) and AnnTaylor (ANN) have beat guarded
April sales forecasts, too. Even Gap (GPS) and Limited (LTD) came in better
than expected, even if they didn't post positive numbers. How did they
manage it? "The weather was perfect for the last 10 days of the month," says
Eliot Laurence, an analyst at Jefferies & Co. "Not just good - perfect."
That's marked a sharp turnaround from the past two months, and probably
released some pent-up demand for spring fashion, Laurence says. (JMC)
9:15 (Dow Jones) Duisenberg's defense of the surprise decision to cut rates
has done nothing to allay fears that the ECB cannot be trusted on the
communication front. Now tells market rate cut should ensure growth and M3
has been distorted upwards to the tune of 50 BP. Inflation will fall below
2.0% In 2002. The euro is already being punished for such an abrupt u-turn.
The psychological 88 cents level will still be a tough break for EUR/USD,
analyst says, but the pair is getting mighty close - now at $0.8810.
Downside is to $0.8730 if the euro drops through. (NK/JEN)
9:10 (Dow Jones) Look for International Business Machines (IBM) to help
power the Dow today - the company is meeting with analysts in New York and
they expect good things. Ahead of the session, UBS PaineWebber reiterates
strong buy and $140 price target for shares that closed Wednesday at
$116.98. "The empire is about to strike back in servers," says analyst Don
Young. (KJT)
9:06 (Dow Jones) Upon early inspection, April was better for retailers than
most people thought. Maybe it was the warmer-than-normal weather or the
psychological lift from the market's upturn, but same-store sales from most
retailers surpassed First Call expectations. Although the gains were spread
across all divisions, apparel stores were the biggest winners, led by
American Eagle Outfitters (AEOS), Kohl's (KSS) and Talbots (TLB). The
biggest loser? May Department Stores (MAY), whose same-store sales decline
of 8.3% fell far short of First Call's estimate of negative 3.9%. (GS)
9:02 (Dow Jones) U.S. rate-cut expectations next week still skewed to 50 BP,
bond market players say. But jobless data "raises some additional questions
as to how much more" Fed will do beyond next week's FOMC, analyst says. June
bond and notes generally shrug off ECB rate cut since it was "long overdue."
(SPC)
(END) DOW JONES NEWS 05-10-01
10:31 AM
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